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The Best Reason I've Seen to Claim Social Security at 62

If you're in this situation, then claiming early is a "win now, win later" scenario.

There's a lot of controversy about when the best time to claim Social Security is. Some argue that claiming at the earliest possible age of 62 is the smartest move you can make, while others are convinced that waiting as long as possible -- between full retirement age and age 70, depending on the type of benefit -- will help you maximize your monthly payment and get more money from Social Security in the long run.

The fact is that everyone's situation is different. For some, claiming early is smart, while for others, claiming later is the best answer. Yet there's one situation where claiming benefits at age 62 is undoubtedly the best move, because it comes with no current downside and substantial long-term advantages. Let's take a closer look at this situation to see when it applies and what other lessons you can learn from it.

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Why the surviving spouse situation is special

The situation in which claiming early benefits makes the most sense involves a scenario in which one spouse in a married, two-earner couple has passed away. In that situation, the surviving spouse has two possible benefits to claim: survivor benefits based on the deceased spouse's work history and retirement benefits based on the surviving spouse's own work history.

One interesting thing about this situation is that it's one of the few in which you still have a choice about which benefit to claim. Most of the time, if you can claim multiple benefits, you'll be treated as if you had claimed all of them at the same time. For instance, married couples who claim their retirement benefits are simultaneously deemed to have claimed any spousal benefits to which they're entitled. The fact that survivors can choose between either of their benefits is the key to how this strategy works.

The win-win scenario

Let's look at a more specific scenario. Say you're 62 and your spouse has recently passed away. Your full retirement age is 66 years and two months, and your primary insurance amount (the benefit you're entitled to receive at your full retirement age) is $1,200 per month, making your early filing amount about $890 per month. Say your deceased spouse's primary insurance amount is also $1,200 per month, meaning that your survivor benefit would be similarly reduced if you claimed it now.

If you claim both of your benefits now, then you'll get $890 per month for the rest of your life. Because your two benefits are the same, you'll only get the amount of your regular retirement benefit; your survivor benefit won't add anything to your monthly checks.

Similarly, if you choose not to claim either of your benefits until full retirement age, you'll get $1,200 per month starting at age 66 and two months. Until then, you won't get anything.

However, if you claim your retirement benefit now but hold off on your survivor benefit, you can get the best of both worlds. You'll receive your retirement benefit of $890 per month for four years and two months, getting 50 monthly payments that add up to $44,500. Then, when you claim your survivor benefit, your total monthly check will rise to $1,200 -- your $890 retirement benefit plus $310 of your survivor benefit, which adds up to your primary insurance amount because you waited until your full retirement age to claim the latter.

In short, you'd come out $41,500 ahead by using this strategy rather than waiting until full retirement age to claim any of your benefits.

There's another way you can do this and have even more flexibility. If you claim survivor benefits first and wait to claim your own retirement benefits, then you can keep them growing until age 70. At that point, you could switch and get $1,568 per month -- your $1,200 primary insurance amount boosted by 8% for every year you wait past 66 and two months. Whether you end up ahead here depends on how long you live, but that's another consideration to think about.

You have to be smart about Social Security

This exact situation is rare, but every married couple needs to take the potential impact of survivor benefits into account. What you do can have an impact not only on your own retirement benefits, but also on the survivor benefits that the other spouse can claim after your death. Taking both into account is critical to making the best decision for your family.

Social Security can be complicated, but it pays to know the ins and outs of the program. That way, you'll be better able to get the most you possibly can and take advantage of win/win scenarios like this one when they arise.

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Author

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.
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